BEAUTY IN THE FRIDGE

Meet Darius Sit of QCP Capital, the godfather of Singapore’s crypto trading industry

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People outside the cryptocurrency and blockchain industry would find Darius Sit as an unfamiliar face. Inside crypto circles however, the 33-year-old is seen as the godfather of crypto trading in Singapore.

His company, QCP Capital, which was founded in 2017, is now one of the world’s largest crypto trading companies with over US$1.5 billion in assets deployed.

On top of that, QCP, through its venture arm QSN, is an early investor in many blockchain companies including Axie Infinity, FTX, Synthetix, AAVE (ETHLend), YFI, Deribit, Avalanche, DYDX, Algorand, Tokocrypto, and Nansen AI — all of which have now grown into global powerhouses in the crypto industry.

The impressive part is the fact that the homegrown company has achieved all of this with only their initial seed capital and without any external funding.

Graduating with a business degree from the National University of Singapore, Darius took on a different career path than most of his peers. It is common for finance graduates to start their careers in a bank to learn the ropes before going to a hedge fund, but Darius immediately started out at Dymon Asia, one of the largest hedge funds at the time.

“It was extremely important for me to start at Dymon Asia. At a bank, I would have been tied to a specific trading desk and made to specialise,” Darius told Vulcan Post, recounting the early days of his career.

“Whereas at Dymon, I had the chance to learn everything across the board. I was on the execution desk and also managing a book, trading everything from foreign exchange (FX), commodities, to interest rates and equities, and it was a very good training in terms of the breadth of skills and exposure to different financial asset classes.”

He eventually left Dymon to join international banking group BNP Paribas, which saw him moving to New York to manage the FX Asia Group there. At the bank, Darius had more time on hand and that was when he came across cryptocurrency and started trading them.

“My first foray into crypto was arbritrage trading. We were doing 30 to 60 per cent arbs in decent sizes and I was making much more money than my actual job. So in 2017, I decided to come back to Singapore to start QCP Capital,” he shared.

How QCP Capital started out

Darius Sit, co-founder of QCP Capital
Darius Sit, co-founder of QCP Capital / Image Credit: Darius Sit

QCP Capital started as a two-man proprietary trading shop, where they trade cryptocurrencies using their own money instead of clients’ money. This way, they are able to earn the full profits from their trade rather than just commission from clients.

As QCP Capital amassed their asset base, the company quickly evolved into an over-the-counter (OTC) trading shop, where they help high net worth individuals trade cryptocurrencies.

QCP was the first local player back in 2017 doing OTC trades focusing on high net worth individuals, and we started to be involved in market making for projects and exchanges. We also started to specialise in Asia and market making for crypto spot in Singapore Dollars, Malaysia Ringgit, Indonesia Rupiah, Thai Baht and more.

– Darius Sit, founder of QCP Capital

What that meant was that traders would come directly to QCP Capital to exchange their real-world currencies into cryptocurrencies.

QCP Capital’s specialisation in Asia also meant that they have deep connections and partnerships with exchanges all over Asia. They are also one of the owners of Tokocrypto, Indonesia’s largest cryptocurrency exchange that’s founded by fellow Singaporean Pang Xue Kai.

As spot trading became more competitive with more players coming to the space, Darius started to look for opportunities in other markets.

I’m a derivatives trader, so when I was looking at the business and thinking about the future, I saw that no one was trading derivatives such as options and forwards because it was a very small part of the market. We decided to focus on that opportunity, because there was a significant need for options in the crypto space and the market would grow exponentially.

– Darius Sit, founder of QCP Capital

That decision proved to be the growth inflection point for QCP Capital. Fast forward to today, QCP Capital runs a US$2 billion book and is one of the top crypto options trading firms in the world.

“We are market leaders in this segment. Folks come to us for large sizes and we also provide pricing in altcoin options and exotics. That’s something that I’m quite proud of — being a Singaporean firm that has become a global leader in the crypto derivative space,” added Darius.

“More recently, we have been dominating in decentralized finance (DeFi) options as well. We provide most of the liquidity in all DeFi options, and I think there is a big future there as well.”

Paving the way for S’pore to become a crypto hub

While many companies are focusing on driving their business agenda and profits, few are actively driving the industry forward.

In 2019, Darius worked with Leng Hoe Lon, Simon Nursey and a few others, to launch a global crypto industry initiative called Crypto OTC Roundtable Asia (CORA). This was an attempt to gather all global institutional crypto players to discuss and arrive at an understanding on how crypto settlements can be done.

Crypto OTC Roundtable Asia
Image Credit: CORA

This is important because in traditional banking, there are known settlement mechanisms. For example, trades are settled in a T+2 timeframe for FX, but there is no such common standard for crypto.

We gathered all the major players in the OTC space such as Alameda (FTX), Galaxy, Genesis, DRW Cumberland, Three Arrows and OSL, and there was an effort to set some trading settlement guidelines. There were subsequent meetings too and CORA became a meeting point for the “institutional crypto industry”.

I am very proud because this was a Singapore-led effort, and Singapore is now the main crypto trading hub of the world, where literally every trading shop is setting up base here.

– Darius Sit, founder of QCP Capital

MAS is on the right track to help regulate crypto

For crypto companies in Singapore, most are familiar with the Payment Services Act (PSA) which regulates the crypto industry here.

Image Credit: Sygna Bridge

While the Act has been established in 2019, only a few licenses have been recently approved to operate legally in Singapore, which sets some wondering why the Monetary Authority of Singapore (MAS) has taken so long to come up with a proper framework with regards to cryptocurrency regulation.

Commenting on MAS’ regulatory effort, Darius only had good things to say.

I think MAS knows exactly what they are doing, and they are doing a very good job contrary to what other people believe.

What people don’t actually know is that Singapore has become the crypto wealth capital of the world. A lot of crypto volume is actually flowing through Singapore. MAS has done this is by balancing clarity and time, because the fact is that no one has a silver bullet for crypto regulation; so what MAS has done successfully is provide clear guidance while the regulatory landscape develops.

– Darius Sit, founder of QCP Capital

Darius went on to draw a comparison between the regulation here in Singapore and Hong Kong — the key difference between the two is that MAS has been “providing clarity”.

“MAS has set guidelines on what you can or cannot do, and in that regard, Singapore actually has the clearest regulation around the world, compared to Hong Kong where they adopt an “opt in” kind of regulation. The results are very telling — all the key crypto players are congregating here in Singapore,” he explained.

MAS’ effort in ensuring Singapore remains crypto-friendly has also spurred a lot of interest from local banks in Singapore.

According to Darius, banks have become more friendly over the past few years and the tone of conversation is changing rapidly. Now, banks are approaching QCP Capital to see if they can partner up for liquidity or even to understand how things are being run.

Building “Goldman Sachs” of the crypto industry

For Darius, QCP Capital is just getting started. What started off as a two-man proprietary trading shop in Singapore has now grown into a strong team of 70.

Darius has also started an asset management company called Phillip Street Partners, which houses the ventures arm PSP Soteria Ventures (PSV).

Philip Street Partners – Willy Ballmann, Darius Sit, IZ Wong, Bobby Hiranandani

PSV invests in other crypto and blockchain companies. Here are some of the notable companies that PSV has managed to be a part of:

  1. Axie Infinity – top grossing NFT game with over US$1.2 billion in revenue this year
  2. FTX – top five crypto exchange in the world with over US$7.5 billion in daily trade volume
  3. Synthetix – world’s largest derivatives liquidity protocol
  4. AAVE (ETHLend) – world’s largest decentralized finance protocol that allows people to lend and borrow crypto
  5. YFI – yield farming automation tool 
  6. Deribit – world’s top bitcoin futures and options exchange
  7. Avalanche – new blockchain layer competing with Ethereum network
  8. DYDX – world’s largest perpetual contracts trader
  9. Tokocrypto – Indonesia’s top two local cryptocurrency exchange
  10. Nansen AI – world’s top blockchain data analytics platform
  11. Algorand – blockchain infrastructure

Ultimately, Darius envisions QCP Capital to become a digital investment bank, or the Goldman Sachs of the crypto industry. While there are many skeptics, Darius sees plenty of opportunities in the space.

“As crypto becomes more and more mainstream, we want to be known as the homegrown Singapore brand name for crypto investments,” shared Darius.


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Featured Image Credit: Darius Sit / QCP Capital

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